Saudi Arabian firms are increasingly outsourcing their information technology operations, despite concerns over cost, privacy and security issues.

The International Data Corporation (IDC), a global market advisory firm, found that the combined Saudi outsourcing market grew by 16.3 percent compared to 13.9 percent for the IT services market as a whole. Cloud computing services spending is expected to increase by 52.9 percent over the same period, although from a low base.

“Saudi organizations are under increasing pressure to improve business agility, optimize IT operations and enhance operational efficiency,” said Hamza Naqshbandi, a senior research analyst for software and IT services at IDC Saudi Arabia.

“At the same time, they are critically reassessing their current positions on technologies such as virtualization, cloud computing and analytics, which are all gradually becoming pervasive across the Kingdom.”

The Saudi cloud market, he said, has evolved considerably over the past 12 months with local providers and telecom operators investing significantly in developing a portfolio of cloud offerings.

“It is generally acknowledged that Saudi customers prefer providers that have local presence and that these customers are increasingly partnering with local players to effectively gain access to the local market, especially for business development, consulting, migration, training and on-boarding,” Naqshbandi said.

He said persistent concerns around security have translated into a strong preference for in-house private cloud developments, but only a handful of Saudi organizations have actually progressed to having fully fledged private cloud environments.

“However, that is expected to change as cloud service providers continue to invest in customer education, and customers better understand the benefits of features such as automation, metering and chargeback that are part of a true cloud deployment,” he said.

He added that commercial expectations, risk management and cost-reduction considerations are important at the organizational level and are driving Saudi executives to develop strategies for cloud computing and identify appropriate workloads and models for their organizations.

“While the benefits of cloud services are slowly being realized by early adopters, concerns about security, usability, data privacy and connectivity persist,” he said.